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Business Impact

Amazon’s Push in India Starts to Deliver

The e-tailing giant learned some hard lessons from its failure to hit it big in China, and it’s putting them to use in the subcontinent.

When Amazon reported net sales of $107 billion for 2015, it had fantastic growth in North America to thank. Over the past three years, the Seattle-based company, already the dominant force in the region, has added $22 billion in sales in North America. Last year the market contributed 60 percent of all of its sales.

Overseas, the company (which we ranked no. 1 on our 2016 list of the 50 Smartest Companies) has been selling more too, but making less money doing so. In part, profits have been reduced by currency differences, but Amazon has also been carrying out an expensive plan to expand its fulfillment capacity around the world.

That global investing is starting to pay off in India, according to a report in the Wall Street Journal. Amazon has said it would invest $5 billion in the market, which today has only 40 million online shoppers out of a population of 1.2 billion. As a result, it’s now gaining on local rival Flipkart Internet, long the largest online retailer in India.

Amazon appears to have learned some valuable lessons in its struggle in the otherwise booming Chinese online shopping market, and it is now determined not to repeat them. The company never managed to establish a strong presence against local giants Alibaba and JD.com, which CEO Jeff Bezos has blamed on not doing enough to customize its offerings to the local market.

In India, the company still prides itself on its fulfillment prowess and recommendation engine, two features it’s known for around the world. But it has also been trying out local adaptations, such as motorcycle delivery men who will accept cash on delivery—useful for the many people in India who do not use credit cards.  

(Read more: Wall Street Journal, Recode, “50 Smartest Companies, 2016”)

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